Non-farm payrolls rose by 227,000 m-o-m in January versus 157,000 (increased from 156,000) in December of last year. The January reading was higher than the consensus expectation of 180,000. In January, the unemployment rate, which comes from a source other than payrolls data, increased to 4.8 percent, up from 4.7 percent in December of last year. Consensus expected an unchanged reading. Specifically, employment declined by 30,000, unemployment increased by 106,000 and the civilian labour force increased by 76,000.

Hourly earnings were weaker-than-expected

Average hourly earnings increased by 0.1 percent m-o-m in January versus an increase of 0.2 percent (lowered 0.4 percent) in December of last year. This was weaker than consensus expectations of 0.3 percent. Average weekly working hours remained at 34.4, in January.

Low productivity and economic overheating likely to curb growth

Our forecast is that GDP growth will remain moderate until the second half of 2017, when Trump’s fiscal policy stimulus would trigger a short-lived economic expansion followed by an economic slowdown. Prevailing economic conditions make a sustainable increase in growth unlikely, in our view. Low productivity growth and high resource utilisation imply that high growth over a longer period would lead to a significant drop in the unemployment rate and economic overheating, which effectively would slow growth